A-shares' April "Good Start" - Computing hardware and innovative drugs lead the rally strongly

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On the first trading day of April, China’s A-share major indexes all rose collectively, with the SSE STAR Market composite index performing particularly strongly. As of the close, the Shanghai Composite Index was at 3,948.55 points, up 1.46%; the Shenzhen Component Index was at 13,706.52 points, up 1.70%; the ChiNext Index was at 3,247.52 points, up 1.96%; and the STAR Market composite index was at 1,674.19 points, up 3.44%. The total turnover across Shanghai, Shenzhen, and Beijing for the full day was 20248 billion yuan, up 190 billion yuan from the previous trading day. On the trading board, nearly 4,500 stocks across the market rose, with innovative drugs and compute-power hardware as the two main leading themes.

Compute-power hardware concept shows strong performance

On April 1, the compute-power industry chain saw a concentrated rebound, and hardware directions such as memory chips and PCBs saw active price action. As of the close, Zhili Fang hit the daily limit with a 20% gain; Tianfu Communications rose more than 10%; several stocks including Mingtai Optical Magnet and Aorui De hit the daily limit; and Cambricon rose nearly 7%.

A research report from Haitong Securities (Hua Tai Securities) said that under AI-driven demand, both quantity and price of storage are rising together, becoming the main incremental factor. TrendForce (TrendForce Consulting) expects that in the first quarter of 2026, DRAM contract prices will rise 90% to 95% quarter over quarter, and shortages may continue until 2027. Meanwhile, the heat for advanced packaging has increased markedly; panel-level packaging (PLP) has become an industry consensus. China is entering a three-party coordinated stage of “wafer fabs making up for capacity + OSAT expanding production + equipment localization,” and the packaging and testing as well as downstream equipment sectors are expected to undergo a valuation reassessment.

A research report from CITIC Securities said it is optimistic about the trend in the computing-and-storage industry under the Agent AI era as storage capacity increases. Near-memory computing is in a high-visibility cycle. It is bullish on the HBM and CUBE industrial chains. At the same time, with tight storage supply, mainstream to niche storage is experiencing shortages and price increases across the board. Multiple manufacturers have said that the year-over-year price increase in the second quarter of 2026 is still expected to be similar quarter over quarter. It is expected that the industry will remain in a supply-demand imbalance—at least until the end of 2027. It recommends focusing on two major areas: storage module companies, which have strong short-term earnings “explosion” capability; and storage original-equipment manufacturers and design companies that are close to OEMs.

Pharmaceutical and biological sector sees multiple catalysts

On April 1, the pharmaceutical and biological sector strengthened again, with innovative drugs and CRO-related stocks surging. As of the close, Jin Yao Pharmaceutical hit its fourth consecutive daily limit; Guangsheng Tang, Aidi Pharmaceutical, Ruizhi Pharmaceutical, and several other stocks hit the daily limit with a 20% gain.

Recently, the pharmaceutical and biological sector has received multiple favorable developments: first, policies have continued to send positive signals. The National Medical Products Administration recently issued a notice on carrying out the “Spring Rain Action” to transform clinical innovation achievements of medical devices. The aim is to support the transformation of clinical innovation results from medical devices, providing strong support for the overall development of the biotechnological industry. Second, in recent days, multiple pharmaceutical companies have released standout earnings reports. ThreeS Life Global Health (San Sheng Guo Jian) achieved operating revenue of 4.199 billion yuan in 2025, up 251.81%; net profit attributable to shareholders of listed companies was 2.899 billion yuan, up 311.49%. BeiGene achieved annual profitability for the first time in 2025. The company recorded operating revenue of $5.3 billion, up 40.2%; net profit of $287 million, compared with a net loss of $645 million in the same period of 2024, achieving a turnaround to profitability.

In addition, entering the second quarter, the innovative drug industry will see two major high-profile conferences: the 2026 annual meeting of the American Association for Cancer Research and the 2026 annual meeting of the American Society of Clinical Oncology (ASCO) will be held in mid-April and at the end of May, respectively.

A research report from Guolian Minsheng Securities said that innovative drugs may have already bottomed out, and that repair-and-replenishment could continue. In the medium and long term, it remains optimistic. Since the beginning of the year, industry-level progress has far exceeded expectations. Large-scale BD deals by CSPC Group and Innovent Biologics have landed, and catalysts such as frontier biology small-nucleic-acid BD deals have been frequent. Together with clear policy support for innovation technologies, and the confirmation of an earnings inflection point brought by impressive annual reports from biotechnology companies and biopharmaceutical firms, the logic of innovative drugs—“indigenous innovation + global monetization”—has continued to be validated.

Institutions: April focuses on performance and certainty in fundamentals

Looking ahead, a research report from Cai Xin Securities said that the market will most likely be dominated by wide-range consolidation, with potentially larger volatility. It recommends managing positions reasonably and waiting for signals of a market turning point.

In April, an Industrial Securities strategy team stated that the market will focus more on certainty in fundamentals. Structurally, there are three scenarios going forward: first, fundamental tech and overseas expansion chains—after earlier discounts, they are expected to become a certainty direction during the earnings period by relying on independent industry trends; second, a price-increase cycle—fundamentally better performance for the price-increase chain is expected to be validated by financial reports, but internally it will be differentiated by fundamentals; in particular, attention should be paid to the impact of oil costs; third, relying purely on the dividend from risk-hedging sentiment and domestic-demand-related products—if there is no fundamental validation, excess returns may decline.

A research report from Guosheng Securities said April is often an important earnings pricing window for the full year, making fundamental validation even more important. The directions with relatively strong earnings certainty in the first quarter mainly include communications equipment, electronic components, power grid equipment, electronic chemicals, industrial metals, specialized equipment, paper-making, chemical products, beverages and dairy products, and so on. In addition, further geopolitical conflicts in the Middle East have heightened the urgency of energy security. Under the trend of energy substitution, the new energy industry also has strong earnings expectations and similarly has fundamental certainty as support.